The High Court approved a personal insolvency arrangement for Esther Kirwan that restructures her mortgage over 35 years, despite the risk that she could face repayment of the outstanding capital at age 90.
Mr Justice Mark Sanfey delivered the judgment on 13 May 2021 in an appeal from the Circuit Court’s refusal to approve the arrangement. The application was made under section 115 of the Personal Insolvency Acts 2012 to 2015 and was unopposed. The court confirmed the arrangement’s coming into effect; it did not decide a contested creditor objection.
The arrangement runs for 12 months and is intended to preserve Ms Kirwan’s reasonable living expenses and continued occupation of her home in Moycarkey, County Tipperary. It restructures the mortgage by capitalising arrears, extending its term to 420 months and switching repayments to interest only. The judgment estimated those repayments at €214.98 a month, at a stated variable rate of 3%. The mortgage capital remains due when the term ends or if Ms Kirwan dies earlier.
At the creditors’ meeting, the only secured creditor, Start Mortgages DAC, and unsecured creditors who voted supported the proposal. The judgment said no unsecured creditor voted against it, although creditors could have been paid in full in bankruptcy. The Circuit Court had refused approval over concern that Ms Kirwan might be unable to repay the capital or secure continued occupation at the end of the term.
Mr Justice Sanfey held that a court considering approval under section 115 may look beyond the statutory criteria where an arrangement would be so unfair or contrary to the legislation’s purpose that approval would be inappropriate. The court should use that power sparingly and only in exceptional circumstances. He distinguished this unopposed section 115 application from applications under section 115A, which involve different criteria.
The judge found that the arrangement complied with the section 115 criteria and had been carefully prepared. Ms Kirwan had received professional advice and understood the risk, while all creditors supported the proposal. The court therefore declined to override their wishes and her informed choice. It allowed the application and ordered that the arrangement come into effect. The judgment did not guarantee that Ms Kirwan would remain in her home for life or resolve what would happen if she survived to the end of the mortgage term.